A federal judge has dismissed a shareholder lawsuit accusing Peloton of concealing quality control and safety problems with the original series Peloton bikes. This included allegations that factory workers were told to paint over rust on seat frames before shipping ahead of the May 2023 recall of 2.2 million original Bikes.
U.S. District Judge Margo Brodie in Brooklyn, New York issued a 54-page decision dismissing the case on March 31st, ruling that shareholders did not show Peloton defrauded them.
The judge said the company’s public statements about being focused on safety, putting “members first,” and making the “best equipment” did not constitute fraud towards investors, even if Peloton was aware of quality issues internally.
Brodie also ruled that Peloton cannot be held liable for initially underestimating the cost of the recall, or for allegedly concealing 35 reports of broken seat posts before the voluntary recall. The judge wrote that even if Peloton knew about those complaints, they did not support the argument that those reports would necessarily lead to a recall of every original Bike sold between January 2018 and May 2023.
The outside of Peloton Studios in New York.
This lawsuit, Solomon v. Peloton, was originally filed in 2023 following the seat post recall. It was dismissed in 2025, but the judge left the door open for the plaintiffs to refile with an amended complaint, which they did last April. This latest ruling dismisses that updated complaint.
The alleged coverup of bike corrosion was known internally at Peloton as “Project Tinman,” according to court papers. The issue first came to public attention when the Financial Times reported in 2022 that Peloton workers had been painting over rust on bikes before they were shipped to customers.
The ruling goes into significant detail about the financial fallout from the recall. After Peloton initially estimated the recall would cost $8.4 million, the company received approximately 750,000 requests for replacement seat posts, which far exceeded their expectations. This led to replacement seatposts taking months to ship to members, and Peloton ultimately had to add an additional $40 million accrual cost.
The recall also triggered Peloton’s first-ever quarterly subscription decline since going public in 2019, with 29,000 subscriptions lost and churn jumping from 1.1% to 1.8%.
However, the judge ruled that Peloton’s public statements about putting “Members First” and making the “best equipment” amounted to “mere corporate puffery” that was “too general to cause a reasonable investor to rely upon them.” She also found that even if Peloton executives knew about the 35 seat post complaints, that knowledge alone did not support the argument that those reports “would lead to a recall of every Bike Peloton sold” over a five-year period.
The news about the most recent lawsuit dismissal was first reported by Bloomberg Law, with Reuters, among others.
Neither the shareholders’ lawyers nor Peloton responded to requests for comment from Reuters at the time of their report.
